Health care: Santa Paula Memorial, the county's smallest medical center, has survived because of a rare commitment by the farming communities it serves.

SANTA PAULA — After all these years, despite all the work to keep it afloat, Santa Paula Memorial Hospital endured the most humiliating period of its history this summer.

Officials at the tiny hospital call the episode "the recent embarrassment."

Essentially, the cash-strapped hospital's top bookkeeper was caught playing the float with employee retirement funds, sometimes holding workers' payroll deductions for extra weeks before depositing them in annuity accounts.

Although 65 employees temporarily lost about $1,000 in interest, and federal regulators left it to hospital officials to clean up the mess, leaders at the Santa Clara Valley's only community hospital still blanch at the blunder that threatened to undercut their most treasured asset.

"It's all about trust," hospital Administrator William Greene said. "We're just trying to bring this to closure with our employees."

That the employees seemed in the mood to forgive right away says a lot about the Santa Paula hospital and the people who work there. "We're like a family here," said nurse Nikki Diaz days after complaining that deductions to her credit union account were posted late.

That was only a month ago.

Yet last week there was hardly a ripple of discontent in what numerous workers had to say about their bosses and the place where so many have worked for so long.

That's probably because Santa Paula's hospital is unlike just about any other.

Staggering changes in the health-care industry have created a harsh new reality for small community hospitals such as Santa Paula's. Dozens have closed statewide as larger hospitals have siphoned off patients by reshaping themselves as specialty centers and by cutting their rates to the bone to grab health maintenance organization contracts.

But Santa Paula has stayed open against all odds because of a rare commitment by the bucolic Santa Clara Valley farm communities it serves.

And things have been that way right from the start, nearly four decades ago.

Founders say Santa Paula Memorial is one of three hospitals in California built by a community without any outside help and paid for in cash. No government grants or low-interest loans. And no mortgage.

All the money came from the pockets of families who wanted their children born near home, or who knew that lives would be saved if they could only build an emergency room nearby.

The people of Santa Paula, Fillmore, Piru and Saticoy ponied up $1 million in 1959 and 1960, and by October 1961 patients were filling the new hospital's 50 rooms, which feature spectacular views of the Topatopa Mountains and one of the prettiest farming valleys outside of Iowa.

"Albert twisted the arms of all the rest of his siblings," recalled relative Dorcas H. Thille, still a Santa Clara Valley farmer. "He had no children. He'd never married. He felt that if he made [his money] here he had an obligation to invest in the community."

Milton Teague's ranch donated the hospital site, 11 acres up a hill at the end of 10th Street. The Thille family--including Grace, the first female physician in Ventura County--gave another 15 acres next door a few years later.

The rest of the money was donated by farmers and merchants, teachers and principals, doctors and nurses, tractor drivers and trash haulers. The local newspaper ran their names each day. Now, on the door of almost every hospital room, a plaque bears the name of a person who gave generously to make sure there was a hospital not too far down the road.

Over the years--as more hospital rooms were added, an administration building completed, an office building constructed, an intensive-care unit built and equipped--the donations never stopped.

Artist and banker Douglas Shively gave the hospital landscape paintings that now brighten corridor walls. Recluse Jeanette Kellogg, who lived up a nearby canyon, turned over a $300,000 estate. Sisters Marguerita and Maria Geier, retired from teaching school in Los Angeles, donated a house worth $110,000.

Actor Kirk Douglas, bruised and battered in a 1991 helicopter crash at the local airport, gave thousands of dollars. So did the chopper's seriously injured pilot, Noel Blanc, son of legendary cartoon voice-actor Mel Blanc.

On a nursery wall, retired nurse Claudette York painted a bright tree of life on which the limbs are covered with snapshots of hundreds of babies born there. In May, a Boy Scout earning his Explorer's badge built a heliport for the hospital.

On Wednesday, hospital administrators revealed a $650,000 gift by longtime Saticoy rancher Ord Toomey and a donation worth $250,000 from Fillmore seamstress Dorothy M. Duncan, who died at the hospital in June.

And just a few days ago, Fillmore rancher Russell Hanscom displayed a more typical level of generosity when he dropped by Greene's office and wrote a $4,000 check.